Market News & Insights
20 June 2014

Yelling Quietly Undoes Draghi’s Good Work

EUR/USD             1.3608

GBP/USD             1.7057

GBP/EUR             1.2534 (0.7978)

EUR/CHF             1.2169

GBP/CHF             1.5252

GBP/AUD             1.8151


Data out of the US yesterday did little to assist the greenback’s continued slump against both its major counterparts.  Wednesday night’s FOMC Meeting was the catalyst for this slump when Yellen’s less than hawkish speech signalled that the US would be sticking with a near-zero interest rate policy.  On the back of this, we have seen the Euro hit 2 week highs against the dollar, while sterling continued its strong form reaching close to 6 year highs.


Yesterday’s weekly Jobless Claims saw the number of Americans filing new claims for jobless benefits fall to 312k from the previous weeks figure of 318K. The figure is a sign of improvements in the labour market and maintained levels not regularly seen since before the recession. May’s Non Farm Payrolls rose by 217K marking the first four-month stretch of job creation above 200,000 since the late 1990s. Traders will be keeping a close eye on all data out of the US now and the labour market readings will be fundamental to the greenback’s recovery.


While the Euro has had a relatively quiet week, it has not stopped it gaining ground against the dollar, if anything no news has been good news following two heavy weeks of selling. It looks like Mario Draghi just can’t catch a break as EUR/USD regained the 1.36 big figure.  This upward momentum will cause pain in the Eurozone, as the FOMC and USD weakness has now undone all the careful work of the ECB in pushing down the euro, which has been as one of the causes for the weak inflation environment.


To the UK and yesterday’s Retail Sales fell for the first time in four months in May to -0.5%, but this figure was in line with what analysts forecasts. The main reason for the fall in the figure was food sales where this figure fell to -2.4%. Unlike the England result last night, this figure did little to alter the upbeat view of Britain’s economy.


Today on the data front we have no releases of note out so the markets will look to take a breather and absorb this week’s releases, with attention looking towards headline news or central bank indications.